GAO finds duplication in programs intended to help new entrepreneurs

Aug. 30, 2012 - 04:26PM
|

The government has dozens of programs that overlap in their efforts to help Americans start new businesses, the Government Accountability Office says in a new report.

Four agencies — the Small Business Administration and the Commerce, Housing and Urban Development, and Agriculture departments — offer 52 different economic development programs that help entrepreneurs create business plans, learn to manage start-ups and obtain funding, according to the Aug. 23 report.

Many of the programs overlap in the types of technical and financial assistance they provide. For example, 24 of the programs offer entrepreneurs in any industry a range of technical assistance, such as business training and counseling. Sixteen programs offer loans to entrepreneurs in any industry.

Many programs target similar entrepreneurs, in particular businesses in rural areas, businesses in economically distressed areas, disadvantaged businesses and small businesses.

Since programs overlap, an entrepreneur could receive assistance from multiple programs, the report shows. For example, a small business in a rural, economically distressed area, such as Susquehanna County, Pa., could receive technical assistance through at least nine programs, GAO said.

Agencies generally did not collect data on who uses their programs, which would help determine whether the same person was getting assistance from multiple programs, the report said.

Entrepreneurs still may have a hard time getting assistance because agencies often rely on third-party entities, such as nonprofit organizations or local governments, to provide the technical and financial assistance. For instance, the small business owner in Susquehanna County would have to travel to Delaware if he wanted to receive technical assistance through USDA’s rural entrepreneurial outreach program, the report said.

The agencies have started collaborating but they have not pursued a number of good practices previously recommended by GAO, according to the report.

For example, USDA and SBA entered into a formal agreement in 2010 to coordinate their programs for businesses in rural areas; however, the agencies have not yet defined their responsibilities, found ways to leverage their resources or established compatible policies, the report said.

“Without enhanced collaboration and coordination agencies may not be able to make the best use of limited federal resources in the most effective and efficient manner,” the report said.